Tesla Motors Makes Millions with Pollution Credits

Tesla Motors Inc (NASDAQ:TSLA) has reportedly brought in about $40 million selling off the pollution credits it has earned by selling its electric vehicles like the Model S, which has been at the center of controversy after a questionable review of it was published in The New York Times. Tesla later released the trip logs in response to that review, indicating that the difficult trip wasn’t exactly as the reporter said.

Today The Wall Street Journal reports that about 10 percent of Tesla Motors Inc (NASDAQ:TSLA)’s revenue last year was made by selling credits earned from various states to competing automakers. Tesla and other makers of energy efficient vehicles are busy building up these credits to use in states like California, which require some of their vehicles to emit no pollutants.

Tesla Motors Inc (NASDAQ:TSLA) delivered fewer than 3,000 vehicles last year, so it doesn’t have to meet the standards because it doesn’t sell enough vehicles. However, it still earns pollution credits with every vehicle it sells.

The filing which indicates Tesla sold those credits does not show which automakers purchased them, but it does show how quickly Tesla’s revenue is increasing from selling those credits. In 2011, the automaker brought in $2.7 million from selling pollution credits, and the year before, it bright in $2.8 million. In 2012, Tesla brought in $40.5 million from selling those pollution credits.

This has created a trend among automakers: they’re creating emission-free vehicles and then launching them first in states which grant them emission credits. Thus far electric vehicles have not been selling well in the U.S. Last year out of the 14.5 million cars sold in the country, the number of fully electric cars was lower than 20,000.